California’s “Housing Crisis Act of 2019” May Boost Housing Production or Just Boost Housing-Related Litigation

On October 9, 2019, Governor Newsom signed into law Senate Bill (SB) 330, or the “Housing Crisis Act of 2019” in an effort to combat California’s current housing shortage, which has resulted in the highest rents and lowest homeownership rates in the nation. In a nutshell, the Housing Crisis Act of 2019 seeks to boost homebuilding throughout the State for at least the next 5 years, particularly in urbanized zones, by expediting the approval process for housing development. To accomplish this, the Housing Crisis Act of 2019 removes some local discretionary land use controls currently in place and requires municipalities to approve all developments that comply with current zoning codes and general plans. If not extended, SB 330 will only be effective from January 1, 2020 through January 1, 2025. Continue Reading

FERC Proposes Major Changes to PURPA Regulations Impacting Qualifying Facility Rates and Requirements; Throwing Roadblocks in the Path of Renewable Energy Development

The Federal Energy Regulatory Commission (“FERC”) requested comments on a proposed rulemaking to revise its regulations under the Public Utility Regulatory Policies Act of 1978 (“PURPA”). The Notice of Proposed Rulemaking (“NOPR”), among other things, would diminish benefits that have been afforded to Qualifying Facilities (“QFs”), including the availability and value of the “PURPA-put.” The proposed changes also could potentially block certain wind and solar projects that previously would have qualified as small power production facilities from receiving that designation. The NOPR presents uncertainty for renewable developers, as well as other non-utility generators. Adoption of the proposed changes may hinder the development of some renewable energy projects. Comments on the proposed rulemaking are due within 60 days of its publication in the Federal Register. Continue Reading

Proposed Rule Expands CFIUS Jurisdiction to Real Estate Investments That Pose a National Security Risk; Could Have Major Impacts on Dealmaking

Key Takeaways:

  • What is CFIUS? The Committee on Foreign Investment in the United States, or CFIUS, is an interagency committee chaired by the Secretary of the Treasury which is authorized to review and approve transactions involving foreign investment in the United States that could impact U.S. national security.
  • Expanded Jurisdiction. The Treasury Department has issued a new proposed rule (Proposed Rule) conferring jurisdiction on CFIUS for specific real estate transactions in the U.S. subject to certain exceptions and carve-outs. While CFIUS previously considered real estate investments on an ad hoc basis, the new rule codifies CFIUS jurisdiction and the scope of its review for real estate transactions involving foreign buyers/investors.
  • Location, Location, Location. CFIUS review will focus on real estate near airports, maritime ports, U.S. military installations, and other facilities or properties of the U.S. Government.
  • Exceptions for Certain Real Properties. CFIUS generally will not review real estate transactions involving a single housing unit or real estate in “urbanized areas.”
  • To File or Not to File. The decision whether to file or not to file a notice with CFIUS for a real estate transaction will be voluntary. Thus, parties to a real estate transaction involving foreign buyers/investors cannot be found to violate the law for failure to file a CFIUS notice. However, if parties to a real estate transaction where CFIUS has jurisdiction do not file a notice and obtain clearance from CFIUS, they risk action by CFIUS at any time in the future, including a forced unwinding of the transaction. Accordingly, many parties may prefer the “safe harbor” of obtaining CFIUS clearance because CFIUS is precluded from re-examining a cleared transaction.
  • Public Comment Period Now Open. Members of the public can comment on the Proposed Rule now through October 17, 2019. Final regulations will become effective no later than February 13, 2020

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Statewide Residential Rent Control Passed In California

The California Legislature has passed AB1482 providing for comprehensive statewide residential rent control and eviction protections and sent it to the Governor for signature, which is expected. Commencing January 1, 2020, AB1482 prohibits a landlord of a residential property from increasing the gross rental rate more than five percent (5%) plus the percentage change in the cost of living, within a 12-month period. AB1482 also requires a landlord to evict a tenant only for “just cause” if the tenant has occupied the property for more than 12 months. AB1482 will be effective only until January 1, 2030.  However, AB1482 also contains exemptions from the rent cap and just cause eviction provisions. Continue Reading

Politics Trumps Economics? Trump’s Revocation of California’s Waiver Under the Clean Air Act

Today President Trump announced on Twitter that the U.S. was revoking California’s waiver under the Clean Air Act (CAA) which allowed it to impose stricter tailpipe emission standards than the federal ones. California’s Governor Newsom and Attorney General Becerra immediately announced that the state would file suit to challenge the revocation.

While the revocation has been characterized as an immediate rollback, the federal corporate average fuel economy (CAFE) standards[1] established under the previous administration, which are consistent with California’s, remain in place. Last year the Trump administration proposed to rollback those standards, freezing the efficiency and emission rules in 2021 and canceling further increases in stringency set through 2028. The final rule has not yet been issued. It is rumored that it will not be, as the administrative record supporting it has many problems and most acknowledge that it faces significant legal hurdles. Continue Reading

Endangered Species Act Rulemakings Face Immediate Challenge

On August 27, 2019, the U.S. Fish and Wildlife Service and National Marine Fisheries Service (collectively, the “Services”) published final rules amending three important parts of the federal regulations that implement the Endangered Species Act (16 U.S.C. §§ 1531 et seq.). The amended rules, which will take effect on September 26:

  • Eliminate the automatic extension of protections to threatened (as opposed to endangered) species;
  • Revise the provisions for designating critical habitat and listing and de-listing species under ESA Section 4; and
  • Revise the procedures for interagency consultation under ESA Section 7.

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FERC Approves MISO’s Tariff Change Permitting Generators to Voluntarily Share Interconnection Facilities

On August 13, 2019, the Federal Energy Regulatory Commission (FERC) approved a request by Midcontinent Independent System Operator, Inc. (MISO) to modify its Tariff and pro forma Generator Interconnection Agreement (GIA) to permit shared interconnection facilities among multiple projects in cases where all parties are amenable to such an arrangement. The Tariff modifications now allow electric generators located in MISO to share interconnection facilities through consent agreements. Previously, MISO did not permit the sharing of interconnection facilities between different projects due to the administrative and practical challenges with such arrangements. However, MISO changed its position after FERC issued Order 807, which created a blanket waiver of certain regulatory requirements, including the obligation to file an Open Access Transmission Tariff (OATT), for certain entities. MISO noted that Order 807 significantly reduced the administrative complexity of many shared facilities arrangements, and led to increased interest in new interconnection arrangements as a means to speed development and/or reduce development costs. Nevertheless, generators should still be careful to meet all remaining MISO Tariff requirements for such agreements. Continue Reading

Court of Appeal Rules HERO Cannot Save Previously Vacated Rental Units

In rejecting a California Environmental Quality Act challenge to a mitigated negative declaration for conversion of a vacant apartment building into a 24-room boutique hotel (the “Project”), the Second District Court of Appeal affirmed the City of Los Angeles’s use of an existing conditions baseline when assessing housing and population impacts. The decision in Hollywoodians Encouraging Rental Opportunities (HERO) v. City of Los Angeles et al. (2019) ___ Cal.App.5th ____ indicates that the time for courts to address population displacement, and more specifically affordable housing, as a CEQA-cognizable impact is fast approaching. Continue Reading

9th Circuit Says CPUC’s Standard Contract and Re-MAT Program for Certain Renewable Generators are not PURPA Compliant

In a recent opinion, the Ninth Circuit held that the California Public Utilities Commission’s (CPUC) Renewable Market Adjusting Tariff (Re-MAT) program and alternative Qualifying Facility (QF) standard offer contract (Standard Contract) were preempted by federal law. The Re-MAT program and Standard Contract required California utilities to purchase energy from certain QFs with capacities up to three and twenty megawatts (MWs), respectively. The court found that the program and the contract violated the Public Utility Regulatory Policies Act of 1978’s (PURPA) pricing requirements. The decision, Winding Creek Solar LLC v. Peterman, USCA Case Nos. 17-17531 and 17-17532 (9th Cir. 2019) demonstrates that PURPA continues to maintain a floor from which state regulatory programs must encourage the development of renewable energy from small producers. In 2018 and prior to Winding Creek, the CPUC instituted a rulemaking to consider adoption of a new Standard Contract but has not yet taken action. Winding Creek reemphasizes the importance of that proceeding for ensuring that California has a PURPA-compliant program in place for utilities to purchase QF-produced energy. Continue Reading

FERC Order No. 860 Mandates New Market-Based Rate Filing and Reporting Requirements for Sellers of Electric Energy

On July 18, 2019, the Federal Energy Regulatory Commission issued Order No. 860.  The order requires entities with or seeking market-based rate authority (sellers) to submit certain data related to FERC’s market power analyses, including its indicative screens and asset appendices, into a “relational database” maintained by FERC.  The order also requires the submission of information associated with long-term firm sales.  When changes occur to data previously submitted, the relational database must be updated monthly by sellers.  The database will be used to, among other things, develop asset appendices and indicative screens for FERC filings that require a market power analysis.  Finally, Order No. 860 altered the deadline for “change in status” filings.  Beginning on January 1, 2021, sellers will need to comply with the order by making a baseline submission and using the “relational database” to make future market-based applications. Continue Reading

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